Japan gives nuclear industry a reason to cheer

Restart of reactors may boost nuclear power, uranium prospects

SAN FRANCISCO (MarketWatch) — Japan’s devastating disasters last year derailed some growth in the nuclear industry world-wide, but demand for uranium is poised to strengthen after the nation that fed doubts over safety approved its first restart of nuclear reactors since the catastrophe.

“Stealthily … developments in the nuclear industry are moving ahead,” said Jeb Handwerger, a natural-resource analyst and editor of GoldStockTrades.com. “Homage was paid to Fukushima,” but it did not deter companies in the nuclear power industry “from continuing the development of nuclear energy.”

Japan to restart nuclear reactors

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Japan plans to reactivate two idled nuclear reactors in Oi this summer, a first step toward getting the nuclear industry back on track, 15 months after the disaster at the Fukushima Daiichi plant. WSJ's Chester Dawson reports from Oi, Japan.

On March 11, 2011, a magnitude 9.0 earthquake, the most powerful ever recorded in Japan, struck the eastern coast of the nation. Tsunami waves followed, causing a power outage at Japan’s Fukushima Daiichi nuclear plant that, in turn, sparked a radiation crisis that was the worst the world had seen since the 1986 Chernobyl nuclear disaster in Ukraine.

And in the months that followed, all 50 of Japan’s main nuclear reactors, which provided around 30% of the nation’s electricity, were shut down — the most recent being a reactor at the Tomari nuclear plant in May of this year.

That marked the first time since 1970 that the nation had been without nuclear power.

“The main difference between now and before Fukushima is that the future growth curve for nuclear power (and uranium demand) is much flatter now than it would have been if Fukushima had not happened,” said Jonathan Hinze, senior vice president, international, at the Ux Consulting Co., the world’s leading nuclear-fuel consultancy.

The ‘restart of the Japan reactors is likely to be the triggering event to start an upward movement in uranium prices and uranium stocks.’
Steve Laflin, International Isotopes

But, in a sign of progress, the Japanese government recently approved the restart of the two reactors at the Oi nuclear power plant in Fukui prefecture in western Japan. The restart process is expected to be completed by late July.

The “restart of the Japan reactors is likely to be the triggering event to start an upward movement in uranium prices and uranium stocks,” said Steve Laflin, president and chief executive officer of International Isotopes
INIS, +1.09%

Some estimates pegged the loss in uranium stocks at more than $1.5 billion in value in the week following the Fukushima disaster, said Laflin, whose firm takes depleted uranium and turns it into specialty fluoride gases.

Since then, uranium prices have “largely stabilized and industry commodity experts believe that it has found a solid floor price,” he said.

Shadow of a doubt

Many analysts don’t believe that the world’s nuclear prospects were ever really threatened, though it certainly looked that way.

Had the Oi units not been approved for restart, “that would have cast a big shadow over the world nuclear industry, as well as over Japan’s economy,” said Ann MacLachlan, European bureau chief of Platts Nuclear Publications, Paris. “So in that sense, it’s good news for the nuclear sector.”

Protests over Japan nuclear restart

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The Japanese government's decision to restart operations at two nuclear reactors in western Japan draws protests. Sunita Rappai reports. Video courtesy of Reuters.

In the wake of Japan’s disaster and the shutdowns of the nation’s nuclear reactors for maintenance and safety checks that followed, nuclear energy appeared to be falling out of favor.

Germany announced plans to phase out nuclear power by 2022 and Switzerland said it would phase out nuclear power by 2034, according to the World Nuclear Association.

“The biggest hits in terms of country nuclear power programs were seen in Japan and Germany,” said Hinze.

“A few other places also saw significantly reduced prospects for nuclear power usage in the future, including Switzerland, Belgium, Taiwan and Italy,” he said. “A few other countries, such as China, reduced their growth targets as additional safety requirements were placed on new construction.”

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